The social networking majors are aggressively pursuing the region's growing online audience, as earlier arrivals Friendster and Orkut defend their turf
A year ago, Shruti Narayan, a 13-year-old who lives in India, began using Google's (GOOG) social networking site, Orkut, to keep tabs on schoolmates. But a few months ago, Narayan made the jump to Facebook because "it has more features and interaction like quizzes and TV shows," she says.
Narayan's network-hopping reflects the colossal scrum among the world's biggest social networks for the hearts and mouse clicks of millions of people in India, China, and elsewhere in Asia. The landgrab has taken on added urgency lately, as leading social networks MySpace and Facebook converge on the region to battle established homegrown networks and foreign sites, especially Orkut and Friendster.
'Financially Intriguing' Market
Until recently, countries such as China and India held scant interest for the U.S.'s social networking heavyweights thanks to low rates of Internet usage and a dearth of advertiser dollars. Facebook and News Corp.'s (NWS) MySpace instead concentrated on the U.S., which according to eMarketer accounts for 73% of social networking's worldwide revenue of $1.23 billion. They left Asia to U.S. laggards Friendster and Orkut, and to local sites such as CyWorld. Of Orkut's 25.2 million active users, about 43% are in the Asia Pacific region, according to Web traffic tracker comScore (SCOR). Friendster has become the largest social network in the region, according to comScore, with 35 million Asia Pacific users, out of 50 million worldwide.
That dominance is now under threat, just as the Asia Pacific market starts to bloom. In China, 230 million people are using the Internet, more than in the U.S., according to consultancy IDC. "Imagine that all these markets, over the next five years, double their penetration," says Karsten Weide, an analyst with IDC. "Then, for the future, the most important market is Asia Pacific. Once it develops more, it's going to become financially more intriguing than the U.S."
Especially when it comes to advertisers. A recent Synovate AsiaBUS study, commissioned by Microsoft (MSFT), found that social networks in Asia Pacific attract the coveted 15- to 34-year-old demographic and that about 15% of the region's users are top managers and business owners. "Each and every month, more and more advertisers are coming to us and paying us more money," says David Jones, Friendster's vice-president of marketing. Like other social networking sites, Friendster doesn't disclose revenue figures.
MySpace in Asia: For Locals, By Locals
Now MySpace and Facebook want in on the action. Already available in 20 countries, MySpace is pouring more funding into ventures in Asia Pacific than anywhere else in the world this year. Last November, MySpace launched a Japanese site. It was the first MySpace site to be especially adapted to local interests and culture and supported by a full, local engineering team. The site prominently features videos and manga related to singers popular in Japan. It also focuses on blogging via cell phones, or microblogging.
In China, MySpace launched a separate, local site this spring. To enhance performance, MySpace began hosting the site locally in September. "Those little, subtle things, if you don't get right—people are not going to like your site," says Travis Katz, senior vice-president and general manager of International MySpace.com. "When we localize our sites, we see a huge surge in growth."
MySpace plans to enter more markets in Asia Pacific in the next six months, Katz says. "We are really just getting started there." For instance, MySpace is considering a kind of MySpace lite, which could include fewer graphics and multimedia features to enable faster loading in areas such as India where dial-up connections are more common than high-speed Internet access.
Facebook's Head Start
Facebook is expected to step up its Asia Pacific efforts in the next six months: "Facebook is committed to the internationalization of the site by…early 2008," a spokesperson writes in a message. But Facebook is already one of the fastest-growing Web sites in the region, registering a 3,242% increase in unique visitors from August, 2006, to August, 2007, when more than 7 million locals logged on to its site, according to comScore. By comparison, Orkut grew 156% and MySpace's traffic only grew 85% during the same period.
Facebook is getting an unexpected leg up from a rival's PR nightmares. In August, a 16-year-old Mumbai boy who had been missing was found murdered by acquaintances he met on Orkut. The ensuing nationwide publicity sent shock waves across India, and kids abandoned Orkut in droves. That came on the heels of an incident in June, when one of India's right-wing Hindu political parties, Shiv Sena, called for a nationwide ban of Orkut in response to hate messages posted on the site against its party leader. Shiv Sena members vandalized Internet cafes in a Mumbai suburb in support of the ban. "You never know when things can go wrong with social networking sites," says Shirish Deo, an Internet cafe owner in Santa Cruz, a Mumbai suburb.
Speaking Asia Pacific's Language
Orkut and Friendster aren't sitting idly by as fellow U.S.-owned networks infiltrate. In late August, Orkut became available in five new Asian languages: Hindi, Bengali, Marathi, Tamil, and Telugu. And a source tells BusinessWeek.com that Orkut is talking to developers in India (BusinessWeek, 10/8/07) about writing third-party applications for its site.
On Sept. 24, Friendster launched its first foreign-language site, in traditional Chinese, with staff in the Philippines and Singapore. The site works with local companies to get advertisers such as Nokia (NOK) on board. This summer, the site rolled out Fan Profiles. The feature, which was a hit in Asia, lets users make new friends through their existing connections. "We are building up steam in greater China," says Jones, adding that Friendster will soon roll out the site in other Asia Pacific languages, too.
It doesn't have time to waste. Now that all of Narayan's friends have made the switch to Facebook, she has no reason to return to Orkut. When her peers across the region do the same network-hopping, they may not look back either.